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EU clears BP Amoco deal
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August 13, 1999: 10:29 a.m. ET
European regulators approve Arco takeover; Exxon, Mobil near clearance
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LONDON (CNNfn) - European regulators gave the green light Friday to BP Amoco's $26 billion takeover of Atlantic Richfield and indicated Exxon's planned $77 billion merger with Mobil could go ahead, subject to a number of conditions.
Competition officials from the European Commission, the Brussels-based executive arm of the European Union, gave preliminary approval to BP Amoco's $25.7 billion acquisition after declining to file a statement of objections to the deal, announced in April. Both oil deals still require approval from the Federal Trade Commission in the United States.
The commission's standard four-month probe into large-scale M&A deals involves the filing of objections, followed by a formal hearing into the case that allows both sides to state their case. The absence of objections paves the way for a formal approval in September, a senior commission official told CNNfn.com Friday.
While Arco has only a small European presence, the commission had expressed concern earlier about the possible concentration created in the North Sea oil market.
BP Amoco (BPA) shares rose almost 1 percent in London trade Friday to 1,237 pence.
Exxon and Mobil had planned a two-day hearing Thursday with the commission about their own plan, but canceled the meeting in a bid to broker a deal. This is expected to include the disposal of some European assets to satisfy regulatory concerns.
"I would think that if they were at loggerheads with the commission staff, they would have requested a hearing," said Douglas Nave at the Brussels practice of U.S. law firm Weil Gotshal and Manges. "Chances are good they will come to a compromise."
To secure approval, Mobil is expected to end a European refining and marketing joint venture with BP Amoco and a gas distribution venture in Germany.
In July the commission indicated its fears of possible anti-competitive effects in these markets.
If Mobil is forced out of the BP joint venture its only real option will be to sell the unit outright to BP, which is unlikely to pay a full price, given that it would be a forced sale.
The companies' decision to waive their right to a hearing is expected to ease the approval process. The EU official said formal approval could come at an EU meeting on Sept. 29. The deal would create the world's largest publicly owned oil company.
Once EU approval is granted, the British government is expected to investigate possible problems with the deal in eliminating competition in the northwest of Scotland, where the combined company will have a significant share of the fuel pumps.
The official commission investigation cited concern over the impact on oil and gas exploration, refining and distribution throughout the European Union. The commission has been examining the effect of the merger country by country.
Exxon and Mobil declined to comment on the talks with the commission except to say they were cooperating with the probe.
-- from staff and wire reports
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